Market Selloff Takes a Break

 

Stocks Recuperate (Some) Losses

All is well on Wall Street again (at least for today), as stocks were able to maintain steady gains throughout the session.  All sectors within the S&P 500 finished in the black, boosting the overall index by 1.57%, while the DJIA (+1.77%) and Nasdaq (+1.58%) also posted strong gains.  US Treasurys sold off as financial markets shifted into risk-on mode, with yields/swap rates climbing 2-5bps across the curve and the 10-year note yield crossing over 3.12%.  In commodity markets, crude oil extended yesterday’s slide, as WTI futures declined 1.4% to $66.10/barrel.  Crude oil prices are now at their lowest levels of the past ten weeks with the ongoing supply concerns propelled by increased production out of the US, Saudi Arabia, and Russia.  

 

 

China Trade Optimism

There were a few items of note that assisted in providing a much needed boost to risk assets during today’s trading session.  This morning financial markets responded to comments from President Trump in which he provided a more positive outlook than usual with regard to striking a trade agreement with China.  “I think that we will make a great deal with China and it has to be great, because they’ve drained our country,” Trump forecasted, along with his preference to get a deal done with China now.  Trump and Chinese President Xi Jinping are expected to cross paths at the G-20 summit next month in Buenos Aires, the outcome of which will have significant consequences for the world’s two largest economies.  President Trump has repeatedly threatened his willingness to impose tariffs on another $267 billion worth of imports if a deal cannot be struck.  Thus far the US has levied taxes on $250 billion worth of Chinese imports, of which China has retaliated with $110 billion of their own.  Helping to offset the impact of the trade tariffs, this morning China’s central bank set its daily dollar rate vs. the yuan at its weakest level in the past decade at 6.9574 yuan per dollar. 

 

 

Americans are Confident in Economy

Other market-friendly news on the day included the Conference Board’s release of its October consumer confidence index, which displayed a reading of 137.9 (136.0 expected) – its highest level since September 2000.  Detailed in the report, consumers maintained a bullish outlook on the economy despite the recent sell-off in equity markets.  The main driver behind the confidence was the existing strength in the labor market, where the unemployment rate currently rests at its lowest level since 1969.  This Friday the Labor Department will release its comprehensive employment report for October, where a 195k addition to payrolls is expected (+134k prior month) along with the jobless rate holding steady at 3.7%.